kamiel [at] creativechoice.org

I think I’m chewing on the same kind of formula. The “invisible hand” should optimize economic transactions in society. Smith, and later Hayek, understood that an exploited working class doesn’t have the basic liberty to vote with their money, so they suggested basic human needs would be taken care of, and then people can participate in the labor and consumer market game. (Libertarians didn’t like this side of Hayek, but it followed from the ideological premise of individual liberty-to-choose).
The market functions because people make decent choices, and they do so because they understand the bad consequences of indecent ones – in their own neighborhoods. On the local market of a town in Oregon or Vermont, an organic farm could out-compete an industrial one, given the populace is well aware of the damage it does to the community. On a global scale, this seems to be impossible (we can appeal to people’s hearts by graphic stories about cacao pickers, and some consumers will change their behavior, but they are not affected in their own immediate social environment, so the appeal is quickly forgotten).
That goes for consumers, but it becomes more problematic for those other “individuals”: corporations. They “have to” ignore such appeals in order to stay competitive. As long as dying forests and enslaved people far away don’t affect the bottom line, they will continue and can only pay lip service to “social entrepreneurship”.
Why is the market economy gridlocked in this way? Why does the meanest always win? I think because the consumer can’t internalize the costs of their products as they are locked in social patterns (“the neighbours also buy these things”) that are very hard to break (without a perceived lack, there can never be real change); and any producer can respond to that demand only by doing business as usual or perishing – which means the surviving producer will go on as usual and increase externalization and inequality even more.